COMPETITIVE INTELLIGENCE PRACTICES AND PERFORMANCE … · commercial banks in Kenya. The research was based on four theories; theory of strategic balancing and theory of network organization

International Academic Journal of Human Resource and Business Administration | Volume 3, Issue 1, pp. 282-302

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COMPETITIVE INTELLIGENCE PRACTICES AND

PERFORMANCE OF EQUITY BANK LIMITED

Geraldine Sande

Master of Business Administration (Strategic Management), Kenyatta University, Kenya

Dr. Mary Ragui

Department of Business Administration, Kenyatta University, Kenya

©2018

International Academic Journal of Human Resource and Business Administration

(IAJHRBA) | ISSN 2518-2374

Received: 15th April 2018

Accepted: 19th April 2018

Full Length Research

Available Online at:

http://www.iajournals.org/articles/iajhrba_v3_i1_282_302.pdf

Citation: Sande, G. & Ragui, M. (2018). Competitive intelligence practices and

performance of Equity Bank Limited. International Academic Journal of Human

Resource and Business Administration, 3(1), 282-302

http://www.iajournals.org/articles/iajhrba_v3_i1_282_302.pdf


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ABSTRACT

The rapidly changing business climate

created by advances in technologies,

economic and social changes demands that

firms embrace competitive intelligence

strategy. The design of competitive

intelligence, as a process that monitors all

elements of the external environment of an

organization is still recent. Commercial

banks have thus resulted in making use of

various competitive intelligence aspects to

ensure performance. The main objective of

the study was to investigate the relationship

between competitive intelligence practices

and performance of commercial banks in

Kenya. The specific objectives were to

establish how product intelligence practices,

markets intelligence practices, technology

intelligence practices and strategic

intelligence influence performance of

commercial banks in Kenya. The research

was based on four theories; theory of

strategic balancing and theory of network

organization all explaining the orientation of

a firm in the aspects that are strategically

related to competitive intelligence strategies

adopted by organizations. This research

study applied the descriptive research

design. The target population composed of

the 191 management staffs employed at

Equity Bank head offices in Nairobi. A

sample of 25% was selected from within

each group in proportions using stratified

random sampling technique. This generated

a sample of 48 respondents. The study used

a survey questionnaire administered using a

drop and pick later method. Data collected

was purely quantitative and it was analyzed

by descriptive and inferential statistical

analysis. The descriptive and inferential

statistical tools such as Statistical Package

for Social Sciences (SPSS Version 21.0) and

MS Excel were used to extract frequencies,

percentages, means and other central

tendencies. Tables and figures were used to

summarize responses for further analysis

and facilitate comparison. A multiple

regression analysis was conducted to show

the strength of the relationship between the

variables. The findings indicated that a

majority of the commercial banks in Kenya

have embraced Competitive intelligence

practices and have a functional CI

framework. The study concludes that

technology, product, market and strategic

alliance competitive intelligence practices

affect the performance of commercial banks

in Kenya.

Key Words: competitive intelligence

practices, performance, Equity Bank Limited

INTRODUCTION

Competitive intelligence is the action of gathering, analyzing, and applying information about

products, domain constituents, customers, and competitors for the short term and long term

planning needs of an organization (Fleisher, 2003). Competitive Intelligence (CI) is both a

process and a product. The process of collecting, storing and analyzing information about the

competitive arena results in the actionable output of intelligence ascertained by the needs

prescribed by an organization. A more focused definition of CI regards it as the organizational


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function responsible for the early identification of risks and opportunities in the market before

they become obvious (Comai and Joaquin, 2007). This definition focuses attention on the

difference between dissemination of widely available factual information (such as market

statistics, financial reports, newspaper clippings) performed by functions such as libraries and

information centers, and competitive intelligence which is a perspective on developments and

events aimed at yielding a competitive edge.

Competitive intelligence should have a single-minded objective to develop the strategies and

tactics necessary to transfer market share profitably and consistently from specific competitors to

the company. A firm which does not rigorously monitor and analyze key competitors is poorly-

equipped to compose and deploy effective competitive strategy and this approach leaves the firm

and its markets vulnerable to attack. The basis for CI revolves around decisions made by

managers about the positioning of a business to maximize the value of the capabilities that

distinguish it from its competitors.

Competitive intelligence (CI) is a process for supporting both strategic and tactical decisions, and

in order to support CI, organizations need systems and processes to gather and analyze reliable,

relevant, and timely information that is available in vast amounts about competitors and markets

(McGonagle and Vella, 2004). Whatever strategic framework the firm chooses to embrace for

the management of its business, no one element remains more fundamental to competitive

strategy than competitive intelligence. Competitive intelligence is more concerned with doing the

right thing, than doing the thing right. The goal of a competitor analysis is to develop a profile of

the nature of strategy changes each competitor might make, each competitor's possible response

to the range of likely strategic moves other firms could make, and each competitor's likely

reaction to industry changes and environmental shifts that might take place. Competitive

intelligence should have a single-minded objective - to develop the strategies and tactics

necessary to transfer market share profitably and consistently from specific competitors to the

company.

Concept of Competitive Intelligence

Competitive intelligence (CI) is a process for supporting both strategic and tactical decisions. In

order to support CI, organizations need systems and processes to gather and analyze reliable,

relevant, and timely information that is available in vast amounts about competitors and markets

(McGonagle & Vella, 2004). Whatever strategic framework the firm chooses to embrace for the

management of its business, no one element remains more fundamental to competitive strategy

than competitive intelligence. Competitive intelligence is more concerned with doing the right

thing, than doing the thing right. The goal of competitor analysis is to develop a profile of the

nature of strategy changes each of them might make, their possible response to the range of

likely strategic moves other firms could make, and their likely reaction to industry changes and

environmental shifts that might take place.


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According to Patton & McKenna (2005) competitive intelligence should have a single-minded

objective - to develop the strategies and tactics necessary to transfer market share profitably and

consistently from specific competitors to the company. Competitive Intelligence is the action of

gathering, analyzing, and applying information about products, domain constituents, customers,

and competitors for the short term and long term planning needs of an organization (Dishman &

Calof, 2008). Competitive Intelligence (CI) is both a process and a product. The process of

collecting, storing and analyzing information about the competitive arena results in the

actionable output of intelligence ascertained by the needs prescribed by an organization.

A more focused definition of CI regards it as the organizational function responsible for the early

identification of risks and opportunities in the market before they become obvious (Parmar,

2004). This definition focuses attention on the difference between dissemination of widely

available factual information (such as market statistics, financial reports, newspaper clippings)

performed by functions such as libraries and information centers, and competitive intelligence

which is a perspective on developments and events aimed at yielding a competitive edge. A firm

which does not rigorously monitor and analyze key competitors is poorly-equipped to compose

and deploy effective competitive strategy and this approach leaves the firm and its markets

vulnerable to attack (Elizondo, 2002).

The basis for CI revolves around decisions made by managers about the positioning of a business

to maximize the value of the capabilities that distinguish it from its competitors. Failure to

collect, analyze and act upon competitive information in an organized fashion can lead to the

failure of the firm itself. Whatever strategic framework the firm chooses to embrace for the

management of its business, no one element remains more fundamental to competitive strategy

than competitive intelligence. Competitive intelligence is more concerned with doing the right

thing, than doing the thing right. The goal of a competitor analysis is to develop a profile of the

nature of strategy changes each competitor might make, each competitor's possible response to

the range of likely strategic moves other firms could make, and each competitor's likely reaction

to industry changes and environmental shifts that might take place (Britt, 2006). Competitive

intelligence should have a single-minded objective - to develop the strategies and tactics

necessary to transfer market share profitably and consistently from specific competitors to the

company.

Bank Performance

Performance is the outcome of all of the organization’s operations and strategies (Wheelen

&Hunger, 2002). Firm’s performance is the appraisal of prescribed indicators or standards of

effectiveness, efficiency, and environmental accountability such as productivity, cycle time,

regulatory compliance and waste reduction. Performance also refers to the metrics regarding how

a certain request is handled, or the act of doing something effectively; of performing; using

knowledge as notable from just possessing it. It is the result of all of the organisation's operations

and strategies (Venkatraman & Ramanujam, 2001). It is also the level to which an individual


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fulfils the expectations concerning how he should behave or function in a certain situation,

context, circumstance or job. Oakland (1999) posited that performance is what individuals do

relating to institutional roles.

Performance measurement systems offer the foundation to extend strategic plans, remunerate

mangers and review an institution’s completion of objectives (Alderfer, 2003). Although

evaluation of performance in the marketing literature is still very vital, it is also complicated

(Andersen & Segars, 2001). Whilst consensual dimension of performance promotes scholarly

assessments and can elucidate managerial decisions, those in marketing have not been able to

find apparent, present and consistent measures of performance on which marketing merit could

be establish (Manogran, 2001). Two methods have been adopted in the literature to determine

financial performance. Longer term performance has been preferred for two reasons: firstly since

that is what the customers of “retail” products for instance unit trusts might be likely to be

examining particularly considering the charging arrangements which make shorter term

investment imprudent. Secondly, one of the reasons of looking at “real” products rather than

theoretical studies is how administrative costs give the results. In principle, such costs might

appear in either front-end or regular annual management charges. Using five-year offer-to-bid

figures should arrest such effects in spite of the choices of individual institutions as to how to

split costs among the two types of charges.

Equity Bank of Kenya

Equity Bank Limited (EBL) was founded in 1984 as a Building Society with the purpose to pool

resources of members for onward provision of mortgage facilities. With time, the growth in

business volume and outreach necessitated the conversion to a fully fledged commercial bank,

which was registered on 30th December 2004. Its establishment was motivated by the desire to

create a financial service provider which would touch base with majority of the unbanked

Kenyan population. The growth in business volume and outreach necessitated the conversion to a

fully-fledged commercial bank which was dully registered on December 31, 2004 as Equity

Bank Limited (EBL). Equity Building Society comprehensively implemented the change

management process according to international standards with the support of Stepwise

international, a team of consultants from Germany - putting emphasis on quality customer

service (customer centrism) and customer focused products. It is at this time that they came up

with the Equity Bank’s alignment model emphasizing on the need to balance out between the

strategy, customers and markets, systems and processes, People (staff), Leadership and

governance in addition to the environment they are operating in.

In 2000 Equity bank launched computerized management information system. This change

contributed to improved productivity, efficiency and an expansion of the portfolio. Equity Bank

is focused on provision of banking services to the microfinance sector of the economy. These

services include salary processing, financial intermediation between savers and borrowers,

customer accounts, insurance, custodial services and financial advisory. The target market is the


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lower income individuals in formal wage earning employment and small to medium sized

enterprises. Recently, the bank has started venturing into corporate banking with the acquisition

of Renaissance capital in May 2009, as one of its subsidiaries focusing mainly on investment

banking. The bank had, as at December 2009, an asset base of KSh.100 billion up from Ksh. 78

billion as at December 2008. Shareholders’ funds stood at Ksh. 21 billion, the rest of the

financing is mainly from customer deposits which stood at Ksh.69.8 billion.

STATEMENT OF THE PROBLEM

Whatever strategic framework a firm chooses to embrace for the management of its business, no

one element remains more fundamental to competitive strategy than competitive intelligence.

Competitive intelligence is more concerned with doing the right thing, than doing the thing right.

The goal of a competitor analysis is to develop a profile of the nature of strategy changes each

competitor might make, each competitor's possible response to the range of likely strategic

moves other firms could make, and each competitor's likely reaction to industry changes and

environmental shifts that might take place. The design of competitive intelligence, as a process

that monitors all elements of the external environment of an organization is still recent (Baars &

Kemper, 2008). Owing to the fact that specific developments in the business environment need

to be closely monitored, it is imperative that senior corporate intelligence professionals think in

terms of integrating competitive intelligence work with marketing intelligence work.

Competition in the industry continually work to drive down the rate of return on capital invested.

Commercial banks have thus resulted in making use of various competitive intelligence aspects

to ensure performance. Studies on competitive intelligence are generally limited. Although there

are an expanding number of studies concerning the use of strategic information systems (Baars

and Kemper, 2008, Korany, 2007), environmental uncertainty, for CI activities, none have

addressed its organizational impact in an empirical study. In the area of CI research, several

empirical studies have explored the relationship between usage of CI practices and corporate

performance. However, the conducted studies were independent of competitive intelligence

practices and performance for greater performance (Li et al., 2008). In Kenya, few studies have

been done on competitive intelligence. Mutua (2010) did a research on competitive intelligence

practices by Essar Telcom (YU) (K) Ltd. Muiva, (2001) conducted a survey on the use of

competitive intelligence systems in the Kenyan Pharmaceutical Industry while Kipkorir, (2001)

researched on competitive intelligence practices by FM radio stations operating in Kenya. These

studies were however done on different institutions other than commercial banks in Kenya. This

is despite the fact that the commercial banking sector in Kenya is facing many challenges posed

by the competitive environment in the commercial banking industry in general. Despite the

adoption of competitive intelligence practices, few studies that have been done on the Kenyan

banking industry. This study therefore sought to fill the existing knowledge gap by carrying out

an investigation of the relationship between competitive intelligence practices and performance

of the commercial banks in Kenya with a special focus on Equity Bank Limited.


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GENERAL OBJECTIVE

The main objective of this study was to investigate the relationship between competitive

intelligence practices and performance of the commercial banks in Kenya where Equity Bank

was the context of focus.

SPECIFIC OBJECTIVES

1. To establish the relationship between product intelligence practices and performance of

the commercial banks in Kenya.

2. To investigate whether markets intelligence practices employed by commercial banks

have an effect on the performance of the commercial banks in Kenya.

3. To assess whether technology intelligence practices affect performance of commercial

banks in Kenya.

4. To establish the strategic alliance intelligence practices adopted by commercial banks and

their effect on performance.

THEORETICAL REVIEW

In this study, the theoretical orientation covers the theory of strategic balancing and theory of

network organization. These theories explain the orientation of a firm in the aspects that are

strategically related to competitive intelligence strategies adopted by organizations.

Theory of Strategic Balancing

The theory of strategic balancing was developed by David Deephouse in 1999. The theory states

that moderately differentiated firms have higher performance than either highly conforming or

highly differentiated firms. Deephouse referred to this as “Strategic Balance Theory”, which

explains why he recommends that “firms seeking competitive advantage should be as different as

legitimately possible”, a brilliant play on words that exactly combines the whole point of his

theory: being different lowers competition and increases competitive advantage, but being too

different creates legitimacy issues which have a negative impact. The Strategic Balance will

combine the positive effects of difference (while avoiding the negative ROA of “too different)”

and the positive effects of similarity (while avoiding the negative ROA of “too similar”).

Deep house assessed the benefits of similarity (conformity) compared to the benefits of diversity

(differentiation), and determined that the optimal strategic model was one that balances

similarity with differentiation. This balance becomes the firms strategic advantage; the ability to

be as different as possible without losing the benefits of legitimacy. Strategic balancing is based

on the principle that the strategy of a company is partly equivalent to the strategy of an

individual. Indeed, the performance of companies is influenced by the actors’ behavior,

including the system of leaders’ values (Calori et al., 1989). Further to an empirical study on


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technological alliances, the principle of strategic balancing to which a technological alliance

generates paradoxes and lives by its paradoxes.

Theory of Network Organization

This theory was proposed by Jacob Moreno in 1930. A network-centric organization is a network

governance pattern emerging in many progressive 21st century enterprises. This implies new

ways of working, with consequences for the enterprise's infrastructure, processes, people and

culture. The idea of social networks and the notions of sociometry and sociograms appeared over

50 years ago. Barnes (1954) is credited with coining the notion of social networks, an outflow of

his study of a Norwegian island parish in the early 1950s.

Network analysis (social network theory) is the study of how the social structure of relationships

around a person, group, or organization affects beliefs or behaviors. Causal pressures are

inherent in social structure. Network analysis is a set of methods for detecting and measuring the

magnitude of the pressures. The axiom of every network approach is that reality should be

primarily conceived and investigated from the view of the properties of relations between and

within units instead of the properties of these units themselves. It is a relational approach. In

social and communication science these units are social units: individuals, groups/ organizations

and societies.

The theory of the network organization, proposes the network organization as a flexible

structure, unlike the traditional company which is complicated to build and maintain. In the

network organization, internal cooperation and market-based competition; giving way to

competition are simultaneously present (Wehrmann, 2005). The network organization theory not

only emphasizes the human and relational dimension, but also operates according to a horizontal

mode of organization aiming at integrating the data of its partners into its information systems. It

enables this type of organization to better control the risks and to be more proactive than a

traditional company.

EMPIRICAL LITERATURE

New Market Intelligence and Bank Performance

Market intelligence (MI) is industry-targeted intelligence that is developed on real-time

(dynamic) aspects of competitive events taking place among the 4Ps of the marketing mix

(pricing, place, promotion, and product) in the product or service marketplace in order to better

understand the attractiveness of the market (Fleisher Craig 2008). A time-based competitive

tactic, MI insights are used by marketing and sales managers to hone their marketing efforts so

as to more quickly respond to consumers in a fast-moving, vertical marketplace. Craig Fleisher

suggests it is not distributed as widely as some forms of CI, which are distributed to other (non-

marketing) decision-makers as well (Skyrme, 2009). Market intelligence also has a shorter-term


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time horizon than many other intelligence areas and is usually measured in days, weeks, or, in

some slower-moving industries, a handful of months.

Market innovation is concerned with improving the mix of target markets and how chosen

markets are best served. Its purpose is to identify better (new) potential markets; and better (new)

ways to serve target markets. One has to deal first with the identification of potential markets.

Identification is achieved through skilful market segmentation. Market segmentation, which

involves dividing a total potential market into smaller more manageable parts, is critically

important if the aim is to develop the performance of a business to the full. Incomplete market

segmentation will result in a less than optimal mix of target markets, meaning that revenues,

which might have been earned, are misread.

It is the prime responsibility of marketing specialists to provide such insights. Sometimes this

responsibility is seen to cover solely the identification of present and likely future geographical

market opportunities. Geography is, however, only one simple way for segmenting markets. A

very wide range of possible criteria exists for segmenting, stretching from objective criteria

based on demographic data through to subjective criteria based on life style interpretations of

consumer and business buying behaviour.

In recent years, “benefit segmentation” has become more widely used (Hooley et al., 2008). It is

based on the study of buyers’ attitudes, on the assumption that in great measure it is needs and

benefits which make up markets and which alter markets. In this form of segmentation emphasis

is on “usage occasions”, namely how buyers seek to gain benefits in particular buying situations.

This form of segmentation is particularly powerful for dividing a total potential market into

meaningful market opportunities. Its power derives from being predicated on the assumption that

the same individual buyer can have different usage needs for the same core product. This

happens quite frequently in practice.

Product Differentiation Intelligence and Bank performance

Product intelligence as strategy has been widely discussed in the strategy field, where the

majority of studies have examined the performance consequences of product. Product

intelligence practices mainly deal with functions within an organization (Prescott, 2011). From

this it can be deduced that issues relating to new product development, launching a new product

on the market, and using facilitative technology such as the Internet, need to be placed within a

strategic marketing framework that encompasses the concept of relationship marketing. The

relevance of a competitive intelligence industry specific approach has been highlighted by

Marceau and Sawka (2011).

This applies in competitive intelligence which is influenced by where one stands within the

product life cycle. When new products are under development and not yet marketed, competitive

intelligence will focus on the marketplace. Once the product is introduced and placed into the


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market, competitive intelligence will shift more emphasis on the customer. As the products gains

market attention, the emphasis shifts to the competition. The intelligent products deliver a whole

new range of capabilities that cannot be found in other products. For example, many of these

products are autonomous and reactive or they can co-operate with other products.

Product intelligence as strategy has been widely discussed in the strategy field, where the

majority of studies have examined the performance consequences of product intelligence – even

though the nature of this relationship still remains largely unresolved (Park, 2002). Early studies

have argued that product intelligence was valuable from a conceptual perspective, increasing

levels of product intelligence should have a positive influence on performance due to economies

of scope and scale, market power effects, risk reduction effects, and learning effects. In contrast,

more recent research has found that conglomerate firms have significantly lower performance. It

has also been shown that highly diversified firms have less market power in their respective

markets than more focused firms.

Product intelligence has been found to be negatively related to firm value and to occur in firms

with less managerial and shareholder equity ownership (Denis et al., 2007). Researchers suggest

that each form of corporate strategy is associated with a different set of economic benefits. In the

case of related product diversification intelligence, the main economic benefits are economies of

integration and economies of scope. Economies of integration provide the firm with lower costs

of production. Also, in the strategic management literature, researchers have argued that the

primary determinant of firm performance is not the extent of product diversification intelligence,

but the relatedness in product intelligence.

Technological Intelligence and Bank performance

Technology intelligence exerts a significant influence on the ability to innovate and is viewed

both as a major source of competitive advantage and of new product innovation. Often,

company’s experience problems in this area, which are caused by lack of capital expenditure on

technology and insufficient expertise to use the technology to its maximum effectiveness

(Alstrup, 2000). The critical role of technological innovation in the development of a company

and its contribution on the economic growth of firms has been widely documented. Ayres (2008)

identified technology as the wealth of companies. According to Abernathy and Utterback, (2005)

the primary role of technological innovation is to assure the survival of the entity, as well as the

business ecosystem, which in turn is based on achieving sustainable financial performance.

Gerstenfield and Wortzel (2007) analyzed the relationship between the usage of Internet-based

innovation technologies, different types of innovation, and financial performance at the firm

level. Data for the empirical investigation originated from a sample of 7,302 European

enterprises. The empirical results show that Internet-based innovation technologies were an

important enabler of innovation in the year 2003. It was found that all studied types of

innovation, including Internet-enabled and non-Internet-enabled product or technological


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innovations, are positively associated with turnover and employment growth. Finally, it was

found that innovative activity is most of the time associated with higher performance. According

to Adam and Farber, (2010), in the organizational context, technological innovation may be

linked to performance and growth through improvements in efficiency, productivity, quality,

competitive positioning and market share, among others. They also found that technological

innovation is positively related with performance.

Regarding the importance of technological innovation, there are a huge body of knowledge like,

technological innovation is a means of survival and growth of industrial sectors or technological

innovation is recognized as a major contributor of economic growth and a dominant factor of

business success not only in developed countries but also in DCs (Pack and Westphal, 2006;

Wilkinson, 2003). Gerstenfield and Wortzel (2007) suggested that one of the requirements for

economic and industrial development of DCs is their ability to innovate successfully. According

to Tefler (2002), a company must innovate or die, the process of innovation is fundamental to a

healthy and viable organization. Those who do not innovate ultimately fail.

Hill and Utterback (2009) identified technological innovation as a major agent of development

and change in societies which has been linked to rising productivity, employment growth and a

strong position in export markets, trade and improved quality of life. However, the inherent

complexity of the process of technological innovation and its involvement in interaction with

different environmental as well as industry-specific factors, made studies of the characteristics of

technological innovation seem difficult to carry out. Organisations should obliterate rather than

automate believing that technology is often introduced for technology's sake without contributing

to the overall effectiveness of the operation. However, banking company’s traditional lack of

resources usually results in a compromise situation. It is important to link technology intelligence

to competitive intelligence in sustaining competitiveness. Organisations that can combine

customer value innovation with technology intelligence have an increased chance of enjoying

sustainable growth and profit.

Strategic Alliances Intelligence and Bank performance

Burgers et al. (2013) defined a strategic alliance as a long-term, explicit contractual agreement

pertaining to an exchange and/or combination of some, but not all, of a firm’s resources with one

or more other firms. According to Burgers et al. (2013) strategic alliances are formed as a

mechanism for reducing uncertainty for parties of the alliance. The benefits of strategic alliances

can be divided into two general categories: those that come about through the reduction of

external environmental uncertainty and those that exist through the reduction of internal

organizational uncertainty. Two sources of external environmental uncertainty are demand

uncertainty and market uncertainty (Harrigan, 1988). Demand uncertainty arises from the

unpredictability of consumer purchasing behaviour. Strategic alliances are formed so that the

partners can gain access to the resources and capabilities required to cope with that uncertainty.

Competitive uncertainty is caused by competitive interdependence where the actions of one firm


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have a direct and significant effect on the market positions of others in the industry often causing

reactionary moves in kind (Hay and Morris, 1979). Competitive uncertainty pushes firms to enter

into alliances to limit competitive interdependence by limiting the number of competitors.

Two types of internal organizational uncertainty can be reduced through strategic alliances. The

first is scarcity of resources. Organizations can join in alliances to share resources, essentially

leveraging their resources with other parties of the alliance. The second internal uncertainty is

referred to as operational uncertainty, which describes uncertainty caused by a lack of

information and knowledge of necessary actions required to remain effective as an organization.

Organizations can join strategic alliances to reduce operational uncertainty by acquiring the

knowledge base of partners in the alliance and/or forming a strong enough competitive position

through the alliance whereby the alliance can establish “rules of the game” in terms of

competitive requirements in an industry.

Strategic information planning is a necessary part of competitive intelligence work and it

requires that a link is made between critical success factors and operating success factors This

means that new strategic organizational frameworks need to be designed in order to

accommodate the emerging communication processes and systems. A number of these

communication processes and systems will be integrated into what is becoming an interactive

organizational process. The interactive, organizational intelligence process facilitates intra- and

inter-organizational activities. With regard to the latter, it can be stated that regarding the

business continuity planning, closer relations need to be developed between the organizations

and government agencies. Firmer links also need to be made between the organizations and their

respective trade associations, if, that is, relevant intelligence is to be shared with other

organizations in the industry (Hussey and Jenster, 1999).

RESEARCH METHODOLOGY

Research Design

Research design refers to the method used to carry out a research. Orodho (2003) defines a

research design as the scheme, outline or plan that is used to generate answers to research

problems. The research study applied the descriptive research design. Descriptive research

design is chosen because it enables the researcher to generalise the findings to a larger

population.

Target Population

According to Ngechu (2004), a population is a well defined or set of people, services, elements,

events, group of things or households that are being investigated. In this study, the target

population composed of the 191 staffs from marketing department, sales department, research

and development department and top management team at Equity Bank head offices in Nairobi.


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Since these are the ones concerned with strategy formulation and implementation and are better

positioned to help derive the findings.

Sample Population

The sampling plan describes how the sampling unit, sampling frame, sampling procedures and

the sample size for the study. The sampling frame describes the list of all population units from

which the sample will be selected (Cooper & Schindler, 2003). Stratified random sampling

technique was used since population of interest is not homogeneous and could be subdivided into

groups or strata to obtain a representative sample. Furthermore, owing to the big number of

target population and given the time and resource constraints, the sampling at least 30% is

recommended by Mugenda & Mugenda (1999). Therefore the sample population of the study

will be 25%. This generates a sample of 48 respondents which the study sought information

from. This made it easier to get adequate and accurate information necessary for the research.

Data Collection Instruments

According to Ngechu (2004) there are many methods of data collection. The choice of a tool and

instrument depends mainly on the attributes of the subjects, research topic, problem question,

objectives, design, expected data and results. The study administered the questionnaire

individually to all respondents of the study. The study exercised care and control to ensure all

questionnaires issued to the respondents were received and achieve this, the study maintained a

register of questionnaires, which was sent, and which and received. The questionnaire

administered using a drop and pick later method.

Data Collection Procedure

According to Kothari (2004), data collection procedures are strategies employed in research to

ensure credible, valid and reliable data is obtained to inform the research findings. The study

administered the questionnaire individually to all respondents of the study. The study exercised

care and control to ensure all questionnaires issued to the respondents are received and achieve

this, the study maintained a register of questionnaires, which will be sent, and which will be

received. The questionnaire will be administered using a drop and pick later method.

Data Processing and Analysis

Before processing the responses, the completed questionnaires was edited for completeness and

consistency. The data was then coded to enable the responses to be grouped into various

categories. Data collected was purely quantitative and it was analyzed by descriptive analysis.

The descriptive statistical tools such as Statistical Package for Social Sciences (SPSS Version

21.0) and MS Excel helped the researcher to describe the data and determine the extent used. The

findings were presented using tables and charts. The Likert scales were used to analyze the mean

score and standard deviation, this helped in investigating the relationship between competitive


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intelligence practices and performance of Equity Bank. Data analysis used frequencies,

percentages, means and other central tendencies.

In addition, the researcher carried out a multiple regression analysis so as to determine the

relationship between competitive intelligence practices and performance of Equity Bank. The

regression equation (Y = β0 + β1X1 + β2X2 + β3X3 + β4X4+ ε):

Where: Y = Performance of Equity Bank; X1 = New market intelligence; X2 = Product

intelligence; X3 = Technological intelligence; X4 = Strategic alliance intelligence; β1, β2,

β3, β4 = Regression Coefficients; ε = Error term

The data was broken down into the different aspects of relationship between competitive

intelligence practices and performance of Equity Bank. This offered a quantitative and

qualitative description of the objectives of the study.

RESEARCH RESULTS

The objective of this study was to evaluate the effect of competitive intelligence on performance

of commercial banks in Kenya. The specific objectives were to establish the relationship

between product intelligence practices and performance of the commercial banks in Kenya,

investigate whether markets intelligence practices employed by commercial banks have an effect

on the performance of the commercial banks in Kenya and to assess whether the technology

intelligence practices affect performance of commercial banks in Kenya. The data and

information obtained from this study will form major findings summarized and presented below.

Market Intelligence and Performance of Equity Bank Limited

The study found that banks employ new market intelligence as a competitive intelligence

practice. New market intelligence applied in the banks concentrated on the 4Ps (price, place

promotion and product). Market intelligence (MI) is industry-targeted intelligence that is

developed on real-time (dynamic) aspects of competitive events taking place among the 4Ps of

the marketing mix (pricing, place, promotion, and product) in the product or service marketplace

in order to better understand the attractiveness of the market, market and customer orientation,

identification of new opportunities (Fleisher Craig 2003). There was most concentration on

pricing and product as shown by a mean score of 4.6 in each case and there was more

concentration on place as shown by a score of 4.5 and promotion shown by a mean score of 3.9.

The banks used some form of market segmentation as part of new market intelligence.

According to the findings in the literature review, market segmentation is critically important if

the aim is to develop the performance of a business to the full and market segmentation was very

effective where 37.5% of the respondents felt that market segmentation was moderately effective

in creating competitive intelligence for greater performance. The coefficient in the regression

http://en.wikipedia.org/wiki/Marketing_mix


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equation is 0.244. This indicates positive influence market intelligence has on bank performance,

however not big enough.

Product Intelligence Practices and Performance of Equity Bank Limited

The product intelligences employed by commercial banks and that affect their performance

include involving customers in product development through focused group discussions (FGDs),

aligning products with customer needs (customized products), CRM and customer service,

customer satisfaction survey, introduction of new products based on customer needs, re-

launching and reviewing of existing products to make them more competitive, ASK exhibitions,

excellent customer service, provision of products to suit target markets through differentiation

and branding of products which achieves customer satisfaction, media advertisement in TV,

radio and newspapers and population dynamics. The coefficient for this variable in the regression

equation was 0.296 or 0.3 if rounded off. This indicates a significant influence that product

intelligence practices have on the competitiveness of a firm and also performance.

Technology Intelligence Practices and Performance of Equity Bank Limited

The study found that technology intelligences used in banks include technological innovation,

product integration with new technology, intelligent ATMs, intelligent monitoring systems,

technology driven products, use of recent IT systems, robust IT system in all departments and

high class communication systems between the departments. Others include videoconferencing,

interconnection/integration with telecoms and auto branches. From the study, the competitive

edges accrued from technology intelligence include engaging in custodial services (sales and

purchase of shares) after investing on the trading IT platform known as custodial Know.

Organisations that can combine customer value innovation (Hannula and Pirttimaki, 2003) with

technology intelligence have an increased chance of enjoying sustainable growth and profit. The

coefficient for this variable in the regression equation is 0.398 or 0.4 which indicates that

technological intelligence practices have a significant and great influence on the performance

and performance of Equity Bank.

Strategic Alliance Intelligence Practices and Performance of Equity Bank Limited

The strategic alliance intelligences for commercial banks include mergers and acquisitions of

other banks, cross-border listing and trading, change of business processes, engaging in strategic

alliances with other banking (financial) institutions for example insurance business and mortgage

industry, global intelligence alliance, use of research and innovation feedback, customer focused

intelligence, ecosystems for example with churches, venturing into new markets through

acquisitions, agency approach and also partnerships. 82.5% of the respondents felt that they

benefits of strategic alliance are those that come about through the reduction of external

environment uncertainty, and 77.5% of the respondents felt that they are those that exist through

the reduction of internal organizational uncertainty. The study findings concur with the literature


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review. Patton and McKenna (2005) study found that strategic alliances are formed as a

mechanism for reducing uncertainty for parties of the alliance. Strategic alliance with other

organizations as shown by a mean score of 4.3 and acquisitions as shown by a mean score of 3.9

were employed to a great extent, while mergers and joint ventured were employed to a moderate

extent as shown by mean scores of 2.8 and 3.3 respectively. Moreover, the regression equation

indicated 0.218 as the coefficient for strategic alliance intelligence practices. This indicates a

significant and positive influence that alliances have had on the performance of Equity Bank

Limited.

REGRESSION ANALYSIS

The study sought to establish the level of influence of the four variables; product, market,

technology and strategic alliance intelligence on the performance of commercial banks in Kenya.

Table 1: Coefficient of Determination (R2)

R R Square Adjusted R Square Std. Error of the Estimate Sig.

.920 .846 .7810 .80139 0.04

The four independent variables that were studied, explain 84.6% of the performance of Equity

Bank Kenya Limited as represented by the R2. This therefore means that other factors not studied

in this research contribute 16.0% of the performance of the commercial banks in Kenya.

Coefficient of determination findings as explained by the P-value of 0.004 which is less than

0.05 (significance level of 5%) confirms the existence of a significant relationship between the

independent and dependent variables.

Table 2: Multiple Regression Analysis

Variables

Unstandardized Standardized T Sig.

Coefficients Coefficients

B Std. Error Beta

(Constant) 1.334 0.311 5.750 .0000

Market intelligence 0.244 0.164 0.193 2.650 .0027

Product intelligence 0.296 0.0481 0.0327 3.534 .0012

Technology intelligence 0.398 0.0714 0.2325 3.686 .0010

Strategic alliance intelligence 0.218 0.0501 0.0484 2.450 .0038

In addition, the researcher conducted a multiple regression analysis so as to determine the

relationship between performance of Equity Bank limited and the four variables. As per the

SPSS generated table, the equation (Y = β0 + β1X1 + β2X2 + β3X3 + β4X4 + ε) becomes:


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Y = 1.334 +-0.244 X1 +0.296X2 + 0.3981X3+ 0.218β4X4

Where: Y = performance of Equity Bank Limited; X1 = market intelligence; X2 = product

intelligence; X3 = technology intelligence; and X 4 = strategic alliance intelligence.

According to the regression equation established, taking all factors (market intelligence, product

intelligence, technology intelligence and strategic alliance intelligence) constant at zero, the

performance of the banks as a result of competitive intelligence practices will be 1.334. Further,

taking all other independent variables at zero, a unit increase in market intelligence practice will

lead to a 0.244 increase in performance. A unit increase in product intelligence will lead to a

0.296 increase in performance; a unit increase in technology intelligence will lead to a 0.398

increase in performance while a unit increase in strategic alliance practice will lead to a 0.218

increase in performance. This infers that technology intelligence contributed more to the

performance of the bank followed by product intelligence.

At 5% level of significance and 95% level of confidence, technology intelligence had a 0.0010

level of significance, product intelligence had a 0.0012 level of significance, market intelligence

showed a 0.0027 level of significant, while strategic alliance intelligence showed a 0.0038 level

of significance. Hence technology intelligence is the most significant factor in contributing to the

performance of commercial banks in Kenya followed by product, market and strategic alliance

intelligence respectively. The t critical at 5% level of significance at k = 4 degrees of freedom is

2.315. Since all t calculated values were above 2.315 then all the variables were significant in

explaining the performance of the commercial banks in Kenya.

Studies by Li et al (2008), Baars and Kemper (2008) and Korany (2007) indicate that

competitive intelligence practices which include product, technology, market and strategic

alliance intelligence have a significant and positive influence on the ability of a firm to compete

favourably with their rivals in the industry and hence perform.

CONCLUSIONS

From the analysis and discussion, the study concludes that technology, product, market and

strategic alliance competitive intelligence practices affect the performance of commercial banks

in Kenya. On market intelligence, the study concludes that concentration on pricing and product,

promotion, market segmentation and foreign market entry lead to performance of commercial

banks to the full and market segmentation.

On product intelligence, the study deduces that product development through focused group

discussions (FGDs), aligning products with customer needs (customized products), CRM and

customer service, customer satisfaction survey, introduction of new products based on customer

needs, re-launching and reviewing of existing products make commercial banks more

competitive and profitable.


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The study concludes that technology intelligences such as technological innovation, product

integration with new technology, intelligent ATMs, intelligent monitoring systems, technology

driven products, use of recent IT systems, robust IT system in all departments and high class

communication systems between the departments affect the performance of the commercial

banks.

On strategic alliance intelligences, the study concludes that strategic intelligence practices

adopted by commercial banks include mergers and acquisitions of other banks, cross-border

listing and trading, change of business processes, engaging in strategic alliances with other

banking (financial) institutions for example insurance business and mortgage industry, global

intelligence alliance, customer focused intelligence, agency approach and partnerships which

affect the performance of the commercial banks. According to the regression analysis, adoption

of technology intelligence practices in the bank contributes most to the performance of

commercial banks in Kenya followed by product, market and strategic alliance intelligence

respectively.

RECOMMENDATIONS

From the findings and discussions of the study, market intelligence has enhanced the

development of market share, decisions making. The study thus recommends that the

commercial banks should adopt market intelligence to enhance efficiency enabling the banks to

deal with their large client base, customer focused intelligence and competitive information

which lead to increase of the banks’ performance.

The study also recommends that for the banks to realize even more profits, they should involve

in product intelligence practices such as aligning products with customer needs (customized

products), CRM and customer service, customer satisfaction survey, introduction of new

products based on customer needs, re-launching and reviewing of existing products.

The study found that technology intelligence leads to high levels of automation, cost reduction

and efficiency enabling the bank to almost deal seamlessly with their large client base of over 4

million customers. The study therefore recommends that the banks should make use of

technology intelligence among other intelligences to increase their competitiveness in terms of

product innovation, customer satisfaction and market orientation. These intelligences ensure that

internal strengths of the banks are utilized for the betterment of the firm which leads to

performance.

The study recommends that commercial banks should be more vigorous in establishing strategic

alliance intelligences through mergers and acquisitions, penetrate foreign market through

alliances, cross-border listing and trading, change of business processes, engaging in strategic


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alliances with other banking (financial) institutions, global intelligence alliance and agency

approach and partnerships which affect the performance of the commercial banks.

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Documents

COMPETITIVE INTELLIGENCE PRACTICES AND PERFORMANCE … · commercial banks in Kenya. The research was based on four theories; theory of strategic balancing and theory of network organization